Weekly Newsletter 04/15/11
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Market Summary Weekly Breakout Report Top Breakout Choices Top 2nd Chances New Features Tip of the Week
Prior editions of this newsletter with our valuable Tips of the Week are available here.
 Weekly Commentary  

Just a brief market comment this week as the tax deadline approaches.

Our 6-month chart of the NASDAQ composite shows that although the NASDAQ has recovered from its mid-March low, it did so on weak volume. Rising prices on lower volume is always a sign of deteriorating market strength, and so it is not surprising that the index failed to hold above resistance at 2802. The flat progress this week reflects continuing weakness as earning season gets off to a disappointing start and rising commodity prices, particularly oil, threaten the strength of the recovery.

The market could go up or down from here. Maybe this will be a good test of our new bottom trend reversal signal :)  (See below).

NASDAQ Composite

 New Features this Week Additional Value that we added this week

No new features this week.

Coming soon - Facebook App.

This Week's Top Tip Tips for getting the most out of our site

Downward Trend Reversal Signal Progress

Tax prep took a bite out of the time to work on this project but progress has been steady. I've identified a promising combination of the stochRSI and Accumulation/Distribution Line which looks good so far.

The value of these two indicators is that the stockRSI is price based while the Acc/Dis indicator is volume based. Although price and volume are not wholly independent, there are advantages to using the acc/dis line to confirm the overbought/oversold indications of the stochRSI.  More rigorous backtesting is needed which we will get too next week (hopefully).

Here is a graphic that shows the signals over the last nine months and there is a bigger chart on the site showing the downward trend reversal signals for the last three years.

9-month bottom reversal signals
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 12341.8 -0.31% 6.6% Up
NASDAQ 2764.65 -0.57% 4.21% Up
S&P 500 1319.68 -0.64% 4.93% Up
Russell 2000 834.98 -0.7% 6.55% Up
Wilshire 5000 13964.9 -0.64% 5.08% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-0.31 %
Dow Jones
3.39 %
Russell 2000
18.75 %
Dow Jones
6.6 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Silver Long-Term Care Facilities Silver Silver
 Most Improved Industry (by change in technical rank2)
Internet Service Providers
+ 97
Recreational Goods - Other
+ 114
Home Improvement Stores
+ 134
Lumber - Wood Production
+ 164
Charts of each industry rank and performance over 12 months are available on the site

1The Market Signal is derived from our proprietary market model. The market model is described on the site.
2The site also shows industry rankings based on fundamentals, combined technical and fundamentals, and on price alone. The site also shows daily industry movements.
 Weekly Breakout Report How confirmed breakouts performed this week
# of Breakouts
Period Average1
Max. Gain During Period2
Gain at Period Close3
This Week 11 12.92 5.05% 4.44%
Last Week 13 14.15 6.8% 2.97%
13 Weeks 222 14.54 11.72%
1The average number of breakouts in each week over the previous 13 weeks.
2This represents the return if each stock were bought at its breakout price and sold at its intraday high.
3This represents the return if each stock were bought at its breakout price and sold at the most recent close.
 Top Breakout Choices Stocks on our Cup-and-Handle list with best expected gain if they breakout
Company Name
Expected Gain1
Best Overall MDM Mountain Province Diamonds, Inc. 115
Top Technical RDEN Elizabeth Arden, Inc. 46
Top Fundamental BCPC Balchem Corporation 42
Top Tech. & Fund. NFLX Netflix, Inc. 54
1This is the gain predicted by our Expected Gain model if the stock breaks out. Expected Gains for all cup-and-handle stocks are published on our site.
 Top Second Chances Stocks that broke out this week and are still in buyable range
Company Name
Expected Gain1
Best Overall AKRX Akorn, Inc. 114
Top Technical KONG KongZhong Corporation (ADR) 76
Top Fundamental DHX DICE HOLDINGS, INC. 83
Top Tech. & Fund. DHX DICE HOLDINGS, INC. 83
1This is the gain predicted by our Expected Gain model after the stock has broken out which uses the volume on breakout as a predictive term. Because the model variance is +/- 38% the expectation can be negative.

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